We made our first offer - Tell us how we did
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Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y@Jordan A., if those were your numbers those were your numbers. I don't see how you could have gone higher than you offered and still made any worthwhile money with those numbers.
However, could those numbers be CHANGED?!?
For example could your scope of work be different and open up any other possibilities to make more money. It sounds like a ranch home, so could you have done a "pop top" and added a 2nd floor to it doubling the size. Maybe an $80k renovation could have gotten you to a $300k ARV in that way and justified paying over asking price.
A deal is what YOU make out of it not what is presented to you. The listing agent may advertise it as a potential straight forward flip but you're the one making the deal and need to see if there are other opportunities.
40 Replies
- Member since 2024 · 6 posts · 2 votes2y
Always good to remember that you make your money on the purchase … and … the deal of a lifetime comes around about once a week. Way too tight for me. Best of luck with the next one.
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes2y
Quote from @Bob S.:
Quote from @Andrew Syrios:
Quote from @Jordan A.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
Aren't the $12k listed for closing costs mostly for the sales side? (i.e. commissions and what not.) In that case, assuming your numbers are right (big if), you'd be looking at a $37,000 profit. A bit tight but hardly terrible. (I should note that I put whatever taxes we'd need to pay in the holding costs so I may have your numbers a bit confused.)
160k all in IF all goes perfect. Hope to sell for 180k, terrible. not including the 3% fee, terrible
Where does $160,000 come from?
$90,000 to buy + $40,000 rehab + $6000 holding costs + $12,000 closing costs = $148,000
Now, I'm assuming the closing costs were for buying and selling and included commissions, which is what I was asking for clarification on. And whatever taxes are owed (unless he's talking about income taxes) should be in holding costs. So I think (?) that's superfluous as someone noted above.
So the estimated profit would be $185,000 - $148,000 = $37,000.
Or by the 70% rule; $185,000 X 0.7 = $129,500 - $40,000 repairs = $89,500. So, just about the $90,000 price he was talking about.
Of course, as I noted, that all assumes the numbers are right which is a big assumption I cannot judge from here.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes2y
Spread is a little tight and I agree that if you're flipping anyway, especially with 10 years experience in construction, you may want to consider waiving inspection to make your offer stand out. Also not to be a stickler but it doesn't count as your first offer unless you submitted it in writing, with proof of funds. Verbal offers don't count!
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes2y
Quote from @Andrew Syrios:
Quote from @Bob S.:
Quote from @Andrew Syrios:
Quote from @Jordan A.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
Aren't the $12k listed for closing costs mostly for the sales side? (i.e. commissions and what not.) In that case, assuming your numbers are right (big if), you'd be looking at a $37,000 profit. A bit tight but hardly terrible. (I should note that I put whatever taxes we'd need to pay in the holding costs so I may have your numbers a bit confused.)
160k all in IF all goes perfect. Hope to sell for 180k, terrible. not including the 3% fee, terrible
Where does $160,000 come from?
$90,000 to buy + $40,000 rehab + $6000 holding costs + $12,000 closing costs = $148,000
Now, I'm assuming the closing costs were for buying and selling and included commissions, which is what I was asking for clarification on. And whatever taxes are owed (unless he's talking about income taxes) should be in holding costs. So I think (?) that's superfluous as someone noted above.
So the estimated profit would be $185,000 - $148,000 = $37,000.
Or by the 70% rule; $185,000 X 0.7 = $129,500 - $40,000 repairs = $89,500. So, just about the $90,000 price he was talking about.
Of course, as I noted, that all assumes the numbers are right which is a big assumption I cannot judge from here.
I think he was talking about short term cap gains tax (10-37% depending on the filer’s income and filing status)?
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes2y
Quote from @Steve K.:
Quote from @Andrew Syrios:
Quote from @Bob S.:
Quote from @Andrew Syrios:
Quote from @Jordan A.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
Aren't the $12k listed for closing costs mostly for the sales side? (i.e. commissions and what not.) In that case, assuming your numbers are right (big if), you'd be looking at a $37,000 profit. A bit tight but hardly terrible. (I should note that I put whatever taxes we'd need to pay in the holding costs so I may have your numbers a bit confused.)
160k all in IF all goes perfect. Hope to sell for 180k, terrible. not including the 3% fee, terrible
Where does $160,000 come from?
$90,000 to buy + $40,000 rehab + $6000 holding costs + $12,000 closing costs = $148,000
Now, I'm assuming the closing costs were for buying and selling and included commissions, which is what I was asking for clarification on. And whatever taxes are owed (unless he's talking about income taxes) should be in holding costs. So I think (?) that's superfluous as someone noted above.
So the estimated profit would be $185,000 - $148,000 = $37,000.
Or by the 70% rule; $185,000 X 0.7 = $129,500 - $40,000 repairs = $89,500. So, just about the $90,000 price he was talking about.
Of course, as I noted, that all assumes the numbers are right which is a big assumption I cannot judge from here.
I think he was talking about short term cap gains tax (10-37% depending on the filer’s income and filing status)?
That's what I meant by income taxes since it's generally taxed the same as regular income. I've rarely seen that put in a flip analysis tbh.
- Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes2y
Quote from @Bob S.:
Quote from @Andrew Syrios:
Quote from @Jordan A.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
Aren't the $12k listed for closing costs mostly for the sales side? (i.e. commissions and what not.) In that case, assuming your numbers are right (big if), you'd be looking at a $37,000 profit. A bit tight but hardly terrible. (I should note that I put whatever taxes we'd need to pay in the holding costs so I may have your numbers a bit confused.)
160k all in IF all goes perfect. Hope to sell for 180k, terrible. not including the 3% fee, terrible
I think they just explained that its either $148k or $154k all in with a sale of $185k. So, 26-32k profit and no 3% fee as closing costs on the selling side were factored in from the sound of it.
You may think that is "terrible", but for someone just starting that could be fine. The experience of doing a first deal is worth more than the profit. So, even a modestly profitable deal is a home-run for a first deal that gets someone experience. - Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Quote from @Andrew Syrios:
Quote from @Jordan A.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
Aren't the $12k listed for closing costs mostly for the sales side? (i.e. commissions and what not.) In that case, assuming your numbers are right (big if), you'd be looking at a $37,000 profit. A bit tight but hardly terrible. (I should note that I put whatever taxes we'd need to pay in the holding costs so I may have your numbers a bit confused.)
160k all in IF all goes perfect. Hope to sell for 180k, terrible. not including the 3% fee, terrible
I think they just explained that its either $148k or $154k all in with a sale of $185k. So, 26-32k profit and no 3% fee as closing costs on the selling side were factored in from the sound of it.
You may think that is "terrible", but for someone just starting that could be fine. The experience of doing a first deal is worth more than the profit. So, even a modestly profitable deal is a home-run for a first deal that gets someone experience.160k all in, RENO is NOT going to be the exact number, and what about the 3% broker fee, This is not a good deal, way to tight .
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Andrew Syrios:
Quote from @Bob S.:
Quote from @Andrew Syrios:
Quote from @Jordan A.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
Aren't the $12k listed for closing costs mostly for the sales side? (i.e. commissions and what not.) In that case, assuming your numbers are right (big if), you'd be looking at a $37,000 profit. A bit tight but hardly terrible. (I should note that I put whatever taxes we'd need to pay in the holding costs so I may have your numbers a bit confused.)
160k all in IF all goes perfect. Hope to sell for 180k, terrible. not including the 3% fee, terrible
Where does $160,000 come from?
$90,000 to buy + $40,000 rehab + $6000 holding costs + $12,000 closing costs = $148,000
Now, I'm assuming the closing costs were for buying and selling and included commissions, which is what I was asking for clarification on. And whatever taxes are owed (unless he's talking about income taxes) should be in holding costs. So I think (?) that's superfluous as someone noted above.
So the estimated profit would be $185,000 - $148,000 = $37,000.
Or by the 70% rule; $185,000 X 0.7 = $129,500 - $40,000 repairs = $89,500. So, just about the $90,000 price he was talking about.
Of course, as I noted, that all assumes the numbers are right which is a big assumption I cannot judge from here.
the numbers provided are 152k, I just rounded up as well, reno mistakes,
- Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes2y
Quote from @Bob S.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Quote from @Andrew Syrios:
Quote from @Jordan A.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
Aren't the $12k listed for closing costs mostly for the sales side? (i.e. commissions and what not.) In that case, assuming your numbers are right (big if), you'd be looking at a $37,000 profit. A bit tight but hardly terrible. (I should note that I put whatever taxes we'd need to pay in the holding costs so I may have your numbers a bit confused.)
160k all in IF all goes perfect. Hope to sell for 180k, terrible. not including the 3% fee, terrible
I think they just explained that its either $148k or $154k all in with a sale of $185k. So, 26-32k profit and no 3% fee as closing costs on the selling side were factored in from the sound of it.
You may think that is "terrible", but for someone just starting that could be fine. The experience of doing a first deal is worth more than the profit. So, even a modestly profitable deal is a home-run for a first deal that gets someone experience.160k all in, RENO is NOT going to be the exact number, and what about the 3% broker fee, This is not a good deal, way to tight .
Closing costs were factored into their closing cost estimate apparently. So, no 3% additional or perhaps their market is strong enough to sell without a broker or maybe one one of the principals is a broker.
And you're 100% right their reno could be LOWER and they make MORE MONEY! You have no idea how conservatively they did their underwriting and never asked. - Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2yOh the 3% was factored? I would still no do this, reno less, hmm, for newbies. Heck I have done 1ks of reno/repairs and we still " get it wrong" once in a while. So let's say 27k profit, less cap gains, I guess an ok way to learn,
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Quote from @Andrew Syrios:
Quote from @Jordan A.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
Aren't the $12k listed for closing costs mostly for the sales side? (i.e. commissions and what not.) In that case, assuming your numbers are right (big if), you'd be looking at a $37,000 profit. A bit tight but hardly terrible. (I should note that I put whatever taxes we'd need to pay in the holding costs so I may have your numbers a bit confused.)
160k all in IF all goes perfect. Hope to sell for 180k, terrible. not including the 3% fee, terrible
I think they just explained that its either $148k or $154k all in with a sale of $185k. So, 26-32k profit and no 3% fee as closing costs on the selling side were factored in from the sound of it.
You may think that is "terrible", but for someone just starting that could be fine. The experience of doing a first deal is worth more than the profit. So, even a modestly profitable deal is a home-run for a first deal that gets someone experience.160k all in, RENO is NOT going to be the exact number, and what about the 3% broker fee, This is not a good deal, way to tight .
Closing costs were factored into their closing cost estimate apparently. So, no 3% additional or perhaps their market is strong enough to sell without a broker or maybe one one of the principals is a broker.
And you're 100% right their reno could be LOWER and they make MORE MONEY! You have no idea hw conservatively they did their underwriting and never asked.
All the best - 2yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
I know OP has already passed on this one but I was with @Bob S. on this one
I assumed 185K sell price minus 10% or so for commissions and closing costs and wrangling
so that's $166,500
purchase 90 + reno 40 + closing 12 (I assumed this was points and whatnot on the buy) + 6 hold = 148K all in - 10K contingency 158K
so... 8500 profit or so
too tight unless i am missing something (like the 12K 'closing costs')
- Investor · Jefferson, GA · Member since 2024 · 19 posts · 19 votes2y
Quote from @Nicholas L.:
I know OP has already passed on this one but I was with @Bob S. on this one
I assumed 185K sell price minus 10% or so for commissions and closing costs and wrangling
so that's $166,500
purchase 90 + reno 40 + closing 12 (I assumed this was points and whatnot on the buy) + 6 hold = 148K all in - 10K contingency 158K
so... 8500 profit or so
too tight unless i am missing something (like the 12K 'closing costs')
Here was my breakdown:
$185,000 Comps
$90,000 purchase price
$40,000 reno
$12,000 closing costs (6% commissions at sale)
$6,000 holding costs (hard money 3 months)
$6,000 taxes (Capital Gains assuming $37,000 profit)
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes2y
Quote from @Bob S.:
Quote from @Andrew Syrios:
Quote from @Bob S.:
Quote from @Andrew Syrios:
Quote from @Jordan A.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
Aren't the $12k listed for closing costs mostly for the sales side? (i.e. commissions and what not.) In that case, assuming your numbers are right (big if), you'd be looking at a $37,000 profit. A bit tight but hardly terrible. (I should note that I put whatever taxes we'd need to pay in the holding costs so I may have your numbers a bit confused.)
160k all in IF all goes perfect. Hope to sell for 180k, terrible. not including the 3% fee, terrible
Where does $160,000 come from?
$90,000 to buy + $40,000 rehab + $6000 holding costs + $12,000 closing costs = $148,000
Now, I'm assuming the closing costs were for buying and selling and included commissions, which is what I was asking for clarification on. And whatever taxes are owed (unless he's talking about income taxes) should be in holding costs. So I think (?) that's superfluous as someone noted above.
So the estimated profit would be $185,000 - $148,000 = $37,000.
Or by the 70% rule; $185,000 X 0.7 = $129,500 - $40,000 repairs = $89,500. So, just about the $90,000 price he was talking about.
Of course, as I noted, that all assumes the numbers are right which is a big assumption I cannot judge from here.
the numbers provided are 152k, I just rounded up as well, reno mistakes,
I'm still not sure why taxes were included. If not, it would be $148,000. You also added in 3% for a brokerage fee, but it's not clear whether the $12,000 in closing costs covers that (I would certainly hope it does!). Lastly, regarding reno mistakes, I guess that just comes down to whether a contingency is built into the $40k rehab estimate or not.
In other words, it might be terrible, but depends on the answers to all that.
- 2yMelanie P.Pro MemberRental Property Investor · Member since 2023 · 1k+ posts · 922 votes
You would have lost a small amount on this deal in all likelihood and learned a lot of lessons along the way. Flipping money is made on properties that you buy for $125 they need $80-100k reno and will be worth $300++ at the end. If you want to speculate in the small dollar flips you or your wife need to get your Realtor license to generate some breaks at purchase and sale. The numbers are just too tight.
- 2yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Bob S.:
Sorry but this is terrible, should be all in 130K MAAX, 5 DAY inspection ? What are you doing? You and your GC should do this in about 20 minutes. PLEASE connect with someone in your area doing deals, Learn then go on your own. Do NOT buy this based on your numbers. This could very easily be a loss or just a waste of time, well not a waste you will learn what not to do :)
All the best
Bob I agree with this at 185k and the numbers presented and by the time you add in sales costs UTLS etc this makes maybe 10k. what folks don't realize many times and I see this on my clients HUDS every week sales cost almost always come to 10% so in this case 18k.. one of the main reasons is the buyer ( if its going owner occ) will almost certainly need seller credits for closing costs. Properties under 300k generally always need them as the buyers are not super strong in their cash positions.. this is my Experience looking at 50 to 75 resale huds a year that come through our shop.
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